Jess: Your argument of course make sense, the only oil in the ointment are the conditions that the IMF is going to impose on the Korean (the Taiwanese have much better balance sheet) when reviewing loans. On the average the chaebods (?) are extremely leverage, I have heard rambling that Samsung is running into problems rolling over loans and being asked to pay through the nose for it. Lending instituions are going to demand stronger balance sheets from their borrowers and in order to finance these upgrades, I think that the Korean have to borrow even more since their cash flow is not sufficient. Now, the Government may step in and with direct funding or loan guarrantees (we did it for Lockheed and Chrysler) to prevent the folding down, but even the Government is right now without much financial muscles. Furthermore, I am told that their is a degree of "revolt" against the big conglomerate that control the economy in Korea, so it might very well be that they will let few fold. When that happens, I think would be the time to move back in, since that will reduce the current overcapacity in the segment and allow for rejuvenation of the industry out there.
Zeev
PS, I got it, impressive. |
